Black Money of Rs.3 Lakh Crores Expected to Remain Un-deposited

From the unconfirmed sources, it is known that out of odd Rs.15 Lakh crores of high denomination 500 & 1000 notes demonetized an amount of Rs.3 Lakh crores may remain un-deposited in making this figure as black-money.

It is very much clear that this Rs.3 Lakh crores of un-deposited money can become a clear-cut profit to RBI, because in the Balance Sheet of RBI, currency issued and circulated is on the liability side of RBI. RBI may not issue currency in lieu of the currency not deposited or not come to them for the purpose of destroying.

As the “Promise to Pay” liability is likely to be reduced, this figure may either be transferred to Central Government as sudden profit or a special reserve to this effect can be created and may remain in the Balance Sheet of RBI itself.

The Reserve Bank of India publishes Balance Sheet and its annual report every year and the specimen of the Balance Sheet is as under:

Under the Schedule 4 of the Balance Sheet, Notes/currency issued by RBI is the total amount which RBI circulates directly, through currency chests of different Banks etc. or is already in circulation in India. When the demonetized currency comes back to RBI it is shown in the Asset side of the Balance Sheet under Schedule 5 and the banks who deposit the same are credited. When the demonetized currency is destroyed then Schedule 5 amount is reduced with such amount and in the same way Notes/Currency under Schedule 4 is reduced.

What remains un-deposited shall ultimately be destroyed after certain time and may be declared as profit of RBI or such amount may be transferred to a Special Reserve in the Balance Sheet of RBI itself.

The retired RBI Governor Mr. D Subbarao has welcomed the move of demonetization, who is of the view that eradication of black-money and counterfeit currency being the main motive of the Government shall not backfire, overall long term effects of this move is positive for investment, arresting inflation etc. If surplus funds are invested in infrastructure like building of highways, hospitals, housing, schools, it may add to the strong infrastructural economy. Long term outlook of Indian economy is very positive as felt by the former governor of RBI.